Policy & Regulations - Afrikan Heroes

Central Bank Of Egypt’s Latest Policy Inspires Local Bank To Launch New $380m Fund

April 30, 2021

Mr Tarek Amer, governor Central Bank of Egypt

While Nigeria’s central bank has been crushing startups in the country through regulations, Egyptian central bank’s new policy which now allows Egyptian commercial banks to commit up to 25% of all credit facilities directed towards small and medium scale businesses in the country into funds targeting startups, has inspired Banque Misr to participate in the establishment of a $380 million fund focused on carrying out operations in the health sector in Egypt, as well as in sub-Saharan Africa.

“This partnership leverages the technical and strategic expertise of Elevate Private Equity and the recognized investment experience of Misr Capital […] The platform set up will actively pursue M&A transactions in highly fragmented healthcare systems in our target jurisdictions,” said Tarek Moharram, Director of the Investment Platform.

“Our long-term strategy is to create larger, consolidated entities that provide comprehensive healthcare, in addition to creating a positive impact on economies, while providing superior returns to investors,” he said.

Here Is What You Need To Know

Named Nile Misr Scan & Labs, this platform jointly launched with Elevate Private Equity will focus on high potential acquisitions in healthcare verticals including hospitals, diagnostic facilities and digital medical services.

Its managers plan to raise $150 million before the first closing scheduled for the first quarter of 2022.

Misr Capital, through this initiative, gives a new direction to its strategy, which is now oriented towards “responsible investments” in sectors such as health, which are among the priorities because of “the positive and real value that it adds to society.”

Banque Misr and Elevate Private Equity wish to benefit from the continued rise in the penetration rate of medical insurance in Egypt as well as the growth of the middle class.

The two partners also hope to take advantage of investment opportunities in the health sector in sub-Saharan Africa.

What Does The Central Bank Of Egypt’s New Policy Say?

According to the central bank, Egyptian commercial banks can now commit up to 25% of all credit facilities directed towards small and medium scale businesses in the country into funds targeting startups. Investments made by banks in the funds could reach as high as 70% of the total fund size of each fund in the first year of the investment; 50% in the second year of the investment; and 30% for the third of the investment.

However, the central bank says all banks investing in the startup’s fund must be allowed to exit from the fourth year. To that effect, it mandates that each of the fund’s bye-laws must include the possibility of the fund allowing the bank to exit starting from the fourth year of the start of the fund’s business. For non-profits, a period of three consecutive years is given for such exit.

For a bank to be able to participate in the scheme, it must obtain the necessary license from the General Authority for Financial Control, responsible for regulating securities and investments in the North African country. A participating bank must also make sure that the total value of its investments into the funds does not exceed 10% of the bank’s principal capital. It must also make sure that its shareholding in the fund does not exceed 50% of the fund or company’s capitalization, unless the fund is part of the bank’s group of companies.

Finally, the central bank has now allowed banks to increase their risk exposure level on the credit facilities given to the startup funds from the previous 0% to a new 20%.

The Implications Of The New Policy

The policy is well-timed. The startup ecosystem in Egypt has been booming and has large presence of local funds — Egypt Ventures, Algebra Ventures, etc. — who will, most likely, be the greatest beneficiaries of the fund. The policy will even increase the spate of this funding.

The new policy will, also, now allow banks to float investment funds targeting startups as part of their subsidiaries.

Charles Rapulu Udoh

Charles Rapulu Udoh is a Lagos-based lawyer who has advised startups across Africa on issues such as startup funding (Venture Capital, Debt financing, private equity, angel investing etc), taxation, strategies, etc. He also has special focus on the protection of business or brands’ intellectual property rights ( such as trademark, patent or design) across Africa and other foreign jurisdictions.
He is well versed on issues of ESG (sustainability), media and entertainment law, corporate finance and governance.
He is also an award-winning writer

Bank Egypt fund Bank Egypt fund

Central Bank Of Egypt Allows Banks To Invest Up To 25% Of Credit Facilities In Startup Funds

Here Is What Ethio Telecom’s TeleBirr Means For Mobile Money Service In Ethiopia

April 28, 2021

In Ethiopia, the stage is set for some fierce competition between Ethio Telecom, a telecom company owned by the country’s government, and M-Birr a mobile money company which has been active since 2009 with over 1.8 million users and a network of almost 33,000 points-of-presence covering branches, agents and other merchants. This competition stems from the fact that Ethio Telecom has just announced the launch of TeleBirr, its mobile money service that will be available to its over 53 million customers starting in May 2021.

Customers will be able to email, receive, and store money using their mobile phones via the TeleBirr mobile money service. They will also be able to pay for goods, utilities, and utility bills, as well as receive money from the diaspora, apply for loans, and connect their bank accounts to their TeleBirr wallet.

The announcement came just days after Ethio Telecom launched a 4G network for its customers in the country’s south west, which will include cities such as Hosana, Arba Minch, Wolaita Sodo, Wolkite, Jinka, and Butajira, among others.

*Mobile Money statistics in 2019 for Sub-Saharan Africa. Source: GSMA*

Late To East Africa’s Booming Mobile Money Market?

Despite being the second most populous country in Africa with a population of more than 109 million, only about 33.86% of Ethiopian adults has formal accounts at financial institutions in Ethiopia, compared to the neighboring Kenya with over 82%.

The country has also been largely left out of the booming mobile money market across the East African region. As of 2019, the total value of mobile money transactions reached $17 billion in Kenya, $12 billion in Tanzania and $5.9 billion in Uganda. Even war-torn Somalia, with a meagre population of 15 million, about seven times smaller than Ethiopia’s, recorded approximately 155 million mobile money transactions, worth $2.7 billion, every month in 2018.

In 2019, the Global System for Mobile Communications (GSMA) declared East Africa number 1 in the world in terms of transaction volume and value of mobile money. With more than 102 million active accounts, generating more than 17.1 billion transactions — an unmatched $293.4 billion in value and a 24% increase from 2018 — the region is the highest of any other sub-regions in the world. Sadly, none of these figures included Ethiopia.

It is therefore little wonder that a 2018 report by the GSMA described Nigeria, Ethiopia and Egypt, home to a combined adult population of over 242 million, as Africa’s mobile money sleeping giants.

Ethiopia’s low rate of mobile money usage could be attributed to the rigid regulatory walls that have ensured monopoly and lack of innovation. Telecommunication, aided by enabling legislations, has particularly driven the widespread adoption of the relatively new financial service type across Africa.

Safaricom’s M-Pesa, recently acquired by Vodacom, accounted for 655.95 million out of the 810.9 million mobile money transactions recorded in Kenya in the third quarter of 2019 alone. In Uganda, MTN enjoys over half the market share for mobile money.

“The reasons for this vary,” notes GSMA in its report about why Nigeria, Egypt and Ethiopia remain the continent’s sleeping giants when it comes to mobile money usage in Africa. “…In Ethiopia, a strictly regulated telco, restrictions on competition, lack of internet connectivity, and low levels of consumer trust and financial literacy have created barriers to uptake and market entry.”

TeleBirr mobile money Ethiopia — *Number of mobile money users as a percentage of the population of the relevant African country…Source: African Payment Solutions*

Finally Loosening The Regulatory Barriers And Joining The League

In April 2020, the National Bank of Ethiopia issued a regulation called Licensing & Authorization of Payment Instrument Issuers. For the first time in Ethiopia’s history, the regulatory regime will allow mobile money transactions. But there is a caveat: any company interested in the new financial service regime must set up a trust account with a deposit money bank in Ethiopia.

“As part of the application process,” the directive read, in parts, “the National Bank, may request for a preliminary meeting and demonstration of the intended payment instrument to be issued, its related services, products as well as operation. Based on requests made and written approval of the National Bank, a payment instrument issuer may be allowed to provide cash-in and cash-out; local money transfers including domestic remittances, load to card or bank account, transfer to card or bank account; domestic payments including purchase from physical merchants, bill payments; over-the-counter transactions; and inward international remittances services.”

In any case, banking, insurance, brokerage services, and legal consultancy still remain off limits for foreign investors, according to a new set of investment rules published on the Ethiopian Investment Commission’s website.

The implication of this is that the two telcos to be selected from the ongoing licensing process in Ethiopia —two out of either MTN, and Global Partnership for Ethiopia, a consortium of telecom operators comprising Vodafone, Vodacom, and Safaricom — will not be allowed to engage in mobile money services.

“When the telecom sector is liberalised,” said CEO of Ethio Telecom, Frehiwot Tamiru, at a consultative meeting Ethio Telecom held with IT and startup companies on the on-going national telecom reform program, “there are guiding policies and directives. We are not opening up completely.”

Like in Nigeria, mobile money operations in Ethiopia will solely be regulated by the National Bank of Ethiopia and not the Ethiopian Communication Authority (ECA), even though telcos may be involved.

“Mobile money service involves two sectors — both the telecom and banking sector,” argued Balcha Reba (Eng.) director general of the Ethiopian Communication Authority. “Since it is a financial service it has to be regulated by the NBE. But, it also involves the telecom sector. Companies would provide the service using the telecom infrastructure; so ECA should also look at the telecom side. So ECA, NBE and Ethio telecom have to discuss the matter.”

And since the matter is yet to be discussed, the NBE remains the sole regulatory authority for mobile money operations in Ethiopia.

The Ethiopian Ministry of Finance (MoF) is also in the process of partially privatising Ethio telecom. To that effect, the ministry has engaged Deloitte Consulting as its transaction advisor to source a strategic partner that would acquire 40 percent stake in Ethio Telecom.

The launch of TeleBirr will therefore be a game changer.

TeleBirr mobile money Ethiopia TeleBirr mobile money Ethiopia TeleBirr mobile money Ethiopia

Barely One Month After Launch, Ethiopian Fintech Startup ArifPay Raises $3.5m

Charles Rapulu Udoh

Charles Rapulu Udoh is a Lagos-based lawyer who has advised startups across Africa on issues such as startup funding (Venture Capital, Debt financing, private equity, angel investing etc), taxation, strategies, etc. He also has special focus on the protection of business or brands’ intellectual property rights ( such as trademark, patent or design) across Africa and other foreign jurisdictions.
He is well versed on issues of ESG (sustainability), media and entertainment law, corporate finance and governance.
He is also an award-winning writer

Women-Only e-Hailing Startup, Moov Services, Suspended In Algeria One Week After Launch

April 26, 2021

The North western province of Algeria, Blida, has suspended the operations of Moov Services, the first taxi service exclusively reserved for women in Algeria. The suspension of the pink taxi service by the management of the transports of Blida province follows statement from the authorities that the startup does not hold a taxi licence.

Critics say the suspension of Moov Services was unjustified given that there are several companies of the same kind in several provinces of Algeria operating without license. They also noted that the pink taxi service would not need a taxi license because it is part of the startup projects, such as yassir, the most famous service of this kind in Algeria.

“In a conservative society such as Blida, the creation of this VTC services was a matter of course,” says Leila Zeroual, the company’s manager, at the launch of the startup last week. “ Our startup aims to provide safe transportation for women and families.”

Moov Services Algeria — *Moov Services adds to the increasing list of startups crushed around Africa by regulations*. Sources: Moov Services

Before the suspension, about more than thirty women took the plunge and became drivers on the Moov Services’ platform. While testifying, they noted the difficulties women face in travelling with men and welcome Moov’s initiative.

“Like many women, I can’t get into a car with a man. With Moov, we can move around in peace,” says Fulla. She was corroborated by her colleague Ouarda, who explained that “ between women, we feel more comfortable and safer.”

However, the move by Moov Services quickly generated mixed reactions on social media, with some seeing it as major competition to men.

Overall, in Europe most of the biggest cities have adopted regulatory frameworks for PHV e-hailing activities, while spots for liberalized markets remain available in the Americas, Africa and the Middle East (Figure 1). Source: *Arthur D Little analysis*

Algeria Joins The League Of African Countries Hostile To Innovative Ride-hailing Startups

The suspension of Moov Services in Blida repeats a similar incident in December last year, when Morocco’s largest city of Casablanca declared the operations of ride-hailing startup, Yassir, within the Casablanca province as illegal, stating that it had not issued any authorization to the startup (called in full, Yassir Maroc Sarl) to operate within the metropolis.

Yassir’s operations in Casablanca will not be the first to be declared illegal by the city’s authorities. In 2015, authorities issued a press release stating that “Uber Maroc’s activities in Casablanca are illegal” and that its activities are “not authorized, and expose people working there, as well as the drivers involved with the company to sanctions.” One of Uber’s sins was that while pretending to partner with local tourist transportation unions, it catered to young Moroccans using local credit cards — not tourists. In 2018, battered by the continued frustration, Uber folded up and left Morocco.

Casablanca Operations Of Algerian Ride-hailing Startup Yassir Declared Illegal, A Year After Launch

Charles Rapulu Udoh

Charles Rapulu Udoh is a Lagos-based lawyer who has advised startups across Africa on issues such as startup funding (Venture Capital, Debt financing, private equity, angel investing etc), taxation, strategies, etc. He also has special focus on the protection of business or brands’ intellectual property rights ( such as trademark, patent or design) across Africa and other foreign jurisdictions.
He is well versed on issues of ESG (sustainability), media and entertainment law, corporate finance and governance.
He is also an award-winning writer

Enter WAAFI, The First Mobile Money App In Somalia, Owned By Hormuud Telecom

April 25, 2021

Hormuud Telecom, the largest telecommunications network in Somalia, has got a lot of things going for it, including having one of its towers reportedly bombed into pieces by Kenya Defence Forces (KDF) in 2019. But perhaps its biggest achievement so far is not only picking the country’s first mobile money license, but also being the first to proceed to launch the country’s first indigenous mobile money app, a benign way of mocking neighbouring Kenya’s Safaricom for accusing it of a heinous crime that necessitated the KDF’s retaliatory bombing.

*Hormuud CEO and Chairman Ahmed Mohammed Yuusuf*

Dubbed WAAFI, the fintech app will offer Somalis access to a variety of digital services on a single platform for the first time in an official manner. Consumers can use the WAAFI app to access their bank accounts, conduct online transactions, submit foreign remittances, and make international and domestic phone calls.

“Somalia is a unique example of a country where digital adoption is widespread among all age ranges and demographics. We are continuing to see a move towards a position where Somalia can claim to be the world’s first truly cashless economy, and the roll out of WAAFI is an important step on that journey. Providing businesses and customers with more efficient technology is going to be a driving force behind the development of the Somali economy and its integration with the wider international community,” Hormuud CEO and Chairman Ahmed Mohammed Yuusuf said.

*Somalia was one of the last African countries to connect to the internet. Source: World Economic Forum*

What Difference Does WAAFI Make Since Somalia Is Already A Large Mobile Money Market?

WAAFI is a fully integrated mobile money service that replaces the existing USSD technology used by many Somalis. In Somalia, USSD-enabled mobile money technology is widely used, with penetration rates of up to 80% in urban areas and up to 55% in rural areas.

WAAFI also allows people to make in-country bank transfers using their phones, which is a first in Somalia. This helps Somalia achieve its goal of becoming a cashless economy and combats fraud, as over 95 percent of the Somali shilling in circulation is estimated to be counterfeit.

WAAFI helps users to deposit and withdraw money from their bank accounts using their EVC Plus wallet. Businesses can use this to produce QR codes that enable customers to deposit funds directly into their bank accounts.

“The WAAFI app has transformed how I do business. Having important digital services all housed under one app makes it easier to pay my employees and trace transactions quickly. Even when I’m abroad or cannot be physically present, with this app I can check on my business and address any problems. Operating throughout the pandemic, this app has allowed me to keep my customers and my employees safe. With contactless payments, we can reduce physical contact and the spread of the virus in our communities,” Abdulaziz Mohamed Nurani, the founder of premier fashion retailer Tik, was quoted as saying.

Hormuud continues to expand its high-speed digital infrastructure across Somalia with the launch of the app. According to Hormuud, roughly half of Somalia’s urban population has access to 4G internet, with slightly more than 60% having access to 3G, both of which are considered broadband-level services in frontier economies.

The telco received the first mobile money license from the Central Bank of Somalia in February 2021, indicating that its mobile money network EVC Plus is now officially controlled and authorised by the Central Bank. In Somalia, Hormuud Telecom has 3.6 million customers, with 3 million of them using EVC Plus.

However, granting the mobile money license does not mean that mobile money operations have not been going on in the country. For every month in the year 2018, the country recorded approximately 155 million mobile money transactions, worth $2.7 billion. Similar transactions have also been going on in the country for the past 10 years.

What the Central Bank of Somalia merely did was to issue the country’s first ever money license to an entity, thereby ending the era of unregulated mobile money services in the country.

WAAFI Mobile Money Somalia — Source: Dataportal

Hormuud Telecom Sticks Out Of The Competition

CBS’ license to Hormuud Telecom is a major achievement for the telecom company as it helps it to partially heave some sighs of relief from the country’s crowded telecoms market, currently made up of 11 licensed local operators.

Although Hormuud’s new license may not make much difference as there are already numerous unregulated services in operations, it may however help the telco to position itself early for post-regulation market share.

According to the World Bank 2017 report, mobile money service in Somalia has reached a penetration rate of 73% (83% in urban areas), compared to a penetration rate of 15% for formal bank accounts. Somalia’s Dahabshiil is one of the largest money transfer companies in Africa, operating in 155 countries.

Majority of Somalian households (58%) make one to four transactions each month and tend to use mobile money over cash for purchases between US$2 and $300. A mobile money account must be linked to a bank account for transactions over $300. As a result, digital money is an excellent cash replacement, and it can be used for everyday transactions such as bill payments, paycheck receipts, and merchant transactions. Nevertheless, a study by Hormuud Telecom revealed that cash-out rates on mobile money platforms in Somalia are less than 5%, indicating a greater number desires to keep money in mobile wallets rather than cash it out.

In contrast to Kenya’s well-known Mpesa mobile money transfer service, Somalia’s transactions are mostly in US dollars. Though mobile money providers are mobile network operators, they are increasingly becoming part of large conglomerates that also provide banking and money transfer services, as in Kenya.

Generally, the East African region has a booming mobile money market. As of 2019, the total value of mobile money transactions reached $17 billion in Kenya, $12 billion in Tanzania and $5.9 billion in Uganda.

WAAFI Mobile Money Somalia WAAFI Mobile Money Somalia

Why African Startup Founders Incorporate Their Startups In Foreign Countries

Charles Rapulu Udoh

Charles Rapulu Udoh is a Lagos-based lawyer who has advised startups across Africa on issues such as startup funding (Venture Capital, Debt financing, private equity, angel investing etc), taxation, strategies, etc. He also has special focus on the protection of business or brands’ intellectual property rights ( such as trademark, patent or design) across Africa and other foreign jurisdictions.
He is well versed on issues of ESG (sustainability), media and entertainment law, corporate finance and governance.
He is also an award-winning writer

West African Central Bank Authorizes Member Countries To Issue Digital Currency

April 24, 2021

The Central Bank of West African States, which serves the eight west African countries that share the common West African CFA franc currency, has published the terms under which member countries’ national treasuries will link their solutions to a central platform run by the West African Economic and Monetary Union Interbank Grouping (GIM-UEMOA) in order to issue digital currency and prepaid cards for electronic payments of public allowances (salaries, scholarships, pensions, etc.).

“Digital currency is a monetary value reflecting a claim on the issuing institution that is held in electronic form, including magnetic; distributed without delay in exchange for remittance of funds in a sum equal to or greater than the monetary value issued; and recognized as a means of payment by natural or legal persons other than the issuing institution,” reads instruction №008–05–2015 governing the terms and conditions for carrying out the activities of electronic money issuers in the Member States of the West African Monetary Union (WAMU).

Francophone Africa's CFA franc is under fire | The Economist — *Located in Dakar, Senegal The Central Bank of West African States is a central bank serving the eight west African countries which share the common West African CFA franc currency*

Here Is What You Need To Know

The rules provide that the institutions that can issue electronic money are banks; payment financial institutions; decentralized financial systems and electronic money institutions.

The rules therefore encourage public treasuries to promote the use of payment and withdrawal cards, electronic wallets, and telepayments, as well as any other modern payment method and instrument yet to be developed, in particular by forming groups with the goal of developing national or regional electronic transfer processes.

However, payment through electronic or digital money has been limited, for now, to those who receive public state benefits, such as civil servants, grant recipients, or retirees.

Any national public treasury can act by submitting an application to the Central Bank for authorization to issue electronic money, which will conduct a compliance review of the file.

Similar To Central Bank of Tunisia’s Digital Currency Project

The new rules are similar to those recently put in place by the central bank of Tunisia under Central Bank of Tunisia Digital Currency project.

The country’s Dinar Digital network under “Central Bank of Tunisia Digital Currency” project brings together member financial institutions, with the aim of using blockchain technology to fully digitalise the country’s fiat money (cash). The BCT Digital Currency project hopes to also improve efficiency and reduce the costs of financial transactions for Tunisians.

African digital currency African digital currency

Central Bank Of Tunisia Licenses The Country’s First Blockchain-powered Bank

Charles Rapulu Udoh

Charles Rapulu Udoh is a Lagos-based lawyer who has advised startups across Africa on issues such as startup funding (Venture Capital, Debt financing, private equity, angel investing etc), taxation, strategies, etc. He also has special focus on the protection of business or brands’ intellectual property rights ( such as trademark, patent or design) across Africa and other foreign jurisdictions.
He is well versed on issues of ESG (sustainability), media and entertainment law, corporate finance and governance.
He is also an award-winning writer

MTN Joins Orange, Becomes A Tax Collector In Cameroon

April 13, 2021

“The declaration and payment of your taxes by electronic means (mobile phone) are now operational for MTN subscribers.”

This is the message that the Directorate General of Taxes (DGI) in Cameroon has been disseminating for several days. According to the tax administrator, the new tax collector will facilitate payment to taxpayers at the country’s divisional tax centers (CDIs).

Here Is What You Need To Know

MTN thus becomes the second telecom operator after the Cameroonian subsidiary of Orange.

With both Orange and MTN Cameroon coming on board, electronic tax payment service now reaches some 20 million subscribers in the central African country.

Other operators such as Camtel and Nexttel as also waiting to join.

Electronic tax collection is a provision of the country’s 2021 finance law.

The law now covers the issuance and notification of receipts electronically and consequently eliminated the issuance of manual receipts which are a source of “various fraud”.

However, according to the 2021 finance law, taxpayers can also carry out these tax transactions by bank transfer.

The country recently prohibited the payment of tax in cash. This is to avoid embezzlement of public funds. Indeed, tax officials in the past were not often hesitant to help themselves when in contact with cash.

In 2017, the country’s Minister of Finance had to sanction no less than 137 agents of his administration. The charges against these employees revolved essentially around the production of false receipts and the embezzlement of revenue.

These agents, usually deployed in public revenue collection stations, fabricated false documents attesting to the payment of collected revenue into state coffers, although these funds did not appear anywhere in the treasury books.

MTN and Orange will hope to eliminate most of these lapses.

Charles Rapulu Udoh

Charles Rapulu Udoh is a Lagos-based lawyer who has advised startups across Africa on issues such as startup funding (Venture Capital, Debt financing, private equity, angel investing etc), taxation, strategies, etc. He also has special focus on the protection of business or brands’ intellectual property rights ( such as trademark, patent or design) across Africa and other foreign jurisdictions.
He is well versed on issues of ESG (sustainability), media and entertainment law, corporate finance and governance.
He is also an award-winning writer

MTN tax Cameroon MTN tax Cameroon

The Uncommon Strategy Used By Edtech Startup, GoMyCode, To Expand To Foreign Countries From Tunisia

Yahya Bouhlel, co-founder and chief executive officer (CEO) of GoMyCode

To expand to foreign countries as a startup in Tunisia, you have to pass through the eye of a needle. Don’t be confused, the country’s Startup Act is a deal-breaker; it offers a range of uncommon incentives to startups: a monetary grant, which could allow startup founders and all those who are shareholders in a labelled startup to cover their living expenses for one year; an incentive on the cost of patent registration whether in Tunisia or in other offshore countries; a good fail strategy which entitles startups to pull funds from the Tunisian Startups Guarantee Fund if they experience financial turbulence, among others.

But the Startup Act does not give one thing, at least in practice. In Tunisia, transactions in currencies other than the country’s dinar are generally disallowed by the country’s central bank (BCT). In fact, credit and debit cards cannot be used for purchases on foreign commercial internet sites and most Tunisian banks only allow account holders to use bank-affiliated credit and debit cards to make domestic online purchases denominated in dinars.

Now, although the Startup Act, by its terms, currently allows startups to open a special foreign currency account which they can freely fund with contributions of capital, turnover and dividends in foreign currency, it is easier for a camel to pass through the eye of a needle than for a startup to be approved to have access to a foreign currency account.

“Going international for a Tunisian [startup] is almost impossible,” says Yahya Bouhlel, GoMyCode’s co-founder. “To settle elsewhere, you need currencies. The startup label gives us the right to a foreign currency account, but to have them, you have to go through the BCT and wait for months.”

How Did GoMyCode Circumvent This?

To beat this system, the Tunisian edtech startup that teaches coding skills to learners and which is now present in Nigeria, Algeria, Morocco, Egypt, Senegal, Bahrain and Cote d’ivoire had to do one thing: first headquarter abroad, and not in Tunisia.

It therefore, strategically chose to set up its headquarters in The Netherlands where everything is digitized and investors are not afraid to finance startups.

However, the choice of The Netherlands was particularly informed by the fact that the country is welcoming to international business owners and does not discriminate against businesses with a foreign headquarters. Consequently, foreign companies are allowed to own 100% of the stock of (most) Dutch companies. This fact is important because sometimes, it is impossible to own shares (by law) in companies based internationally if you are not resident in any of the countries of choice.

But perhaps, the single most significant point here, that still enabled GoMyCode to retain its Tunisian nationality (or pride itself as a Tunisian startup), is that the Tunisian Companies Law allows entrepreneurs to set up branches of their foreign companies in Tunisia, provided that the branch must appoint at least one director of any nationality during the registration process with the Tunisia Trade Registry in order to conduct any commercial activity in the North African country.

Having done that, GoMyCode proceeded to raise funds abroad, from Dubai, United Kingdom and France, where investors could invest in euros, and not just dinar.

“The business model of the startup requires strong responsiveness from the administration and speed in everything related to paperwork and authorizations. To our great misfortune, this is not the case. We suddenly realize that our officials are not imbued with the startup philosophy. For a Tunisian company to set up in Egypt, Morocco or Nigeria, you have to go through 4 ministries and a multitude of administrations, and the same in the host countries,” Bouhlel says.

If GoMyCode had not pushed beyond its limits despite the tough regulatory turf, it would have been worse off for it.

Today, the startup’s first $850k fundraiser has enabled it to acquire a space in Tunis, Tunisia’s Capital, and to open branches in Algiers (Algeria), Casablanca (Morocco), Lagos (Nigeria), Dakar (Senegal), Abidjan (Cote d’ivoire), Cairo (Egypt) and Manama (Bahrain). It also currently employs 85 full-time people and 150 part-time trainers. Its growth rate is 4 to 5 times higher from one year to the next, and Yahya Bouhlel aims to open 100 spaces to train 50,000 students per year in 15 countries. (It is looking to raise another funding round for interested investors.)

*Labelled startups in Tunisia at a glance*

GoMyCode Is Not Alone; There Are Other Tunisian Startups

Joining GoMyCode in lamenting about the difficulties in internationalization as a Tunisian startup is a fellow country firm Next Gen, which got funded barely two months ago by MAXULA Gestion, manager of the startup fund STARTUP MAXULA SEED FUND.

“The startup label does not allow us to convert our national currency; we had to generate money in foreign currency. So we managed to find a currency fund and we found it in the Sultanate of Oman,” said Moez Lachneb, CEO of NextGen.

But it looked like a miracle for NextGen. It got a US$100,000 grant from the Oman Technology Fund (OTF), an investment fund specializing in supporting innovative national and international startups. Using the grant, the startup opened a foreign currency account, and then from there launched into the neighboring Morocco. It is also planning to open its second branch in Muscat in the Sultanate of Oman soon.

foreign startup expand Tunisia foreign startup expand Tunisia

Charles Rapulu Udoh

Charles Rapulu Udoh is a Lagos-based lawyer who has advised startups across Africa on issues such as startup funding (Venture Capital, Debt financing, private equity, angel investing etc), taxation, strategies, etc. He also has special focus on the protection of business or brands’ intellectual property rights ( such as trademark, patent or design) across Africa and other foreign jurisdictions.
He is well versed on issues of ESG (sustainability), media and entertainment law, corporate finance and governance.
He is also an award-winning writer

Proposed Internet Security Regulation In Botswana To Shut Down Websites For Non-compliance

April 11, 2021

The Botswana Communications Regulatory Authority (BOCRA) has released draft website application protection guidance for stakeholder feedback, with the alert that non-compliance could result in a website’s removal.

According to BOCRA, the recommendations are in order to assist enterprises in creating a checklist of steps to ensuring their websites are not exploited, and that both software engineers and hosting providers are aware of the risks and potential remedies for vulnerable website applications.

Tshoganetso Kepaletswe, Chief Technology Officer at BOCRA

The Authority expects developers to use strict password policies, multi-factor authentication (MFA), cryptography, and correct key protection and standard algorithms.

Additionally, web application developers must have appropriate log-in and surveillance for unusual activity or security accidents. All permissions are checked, settings are updated, and fixes and enhancements are installed by the musty.

Charles Rapulu Udoh

Charles Rapulu Udoh is a Lagos-based lawyer who has advised startups across Africa on issues such as startup funding (Venture Capital, Debt financing, private equity, angel investing etc), taxation, strategies, etc. He also has special focus on the protection of business or brands’ intellectual property rights ( such as trademark, patent or design) across Africa and other foreign jurisdictions.
He is well versed on issues of ESG (sustainability), media and entertainment law, corporate finance and governance.
He is also an award-winning writer

Botswana regulation internet Botswana regulation internet

Nigeria Regulates Foreign Stock-trading Startups Out Of The Country. Here Is What It Means

April 9, 2021

The Securities and Exchange Commission (SEC) in Nigeria, which regulates securities and investments, has officially terminated all partnerships between online stock trading companies and licenced stockbrokers in Nigeria for the purpose of trading unregistered international stocks. The commission issued a statement in which it ordered all stock market operators (including brokers) who partner with online trading platforms to stop doing so.

Securities and Exchange Commission Nigeria

The new order follows a recent court case against Chaka Technologies Limited, a local fintech startup that provides digital platforms for the selling of bonds, stock, and other assets of corporations and other organisations..

“The attention of the Securities and Exchange Commission…has been drawn to the existence of several providers of online investment and trading platforms which purportedly facilitate direct access of the investing public in the Federal Republic of Nigeria to securities of foreign Companies listed on Securities Exchanges registered in other jurisdictions. These platforms also claim to be operating in partnership with Capital Market operators (CMOs) registered with the Commission,” the statement from the commission reads.

“The Commission categorically states that by the provisions of Sections 67–70 of the Investments and Securities Act (ISA), 2007 and Rules 414 & 415 of the SEC Rules and Regulations, only foreign securities listed on any Exchange registered in Nigeria may be issued, sold or offered for sale or subscription to the Nigerian public. Accordingly, CMOs who work in concert with the referenced online platforms are hereby notified of the Commission’s position and advised to desist henceforth,” it adds.
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A Crushing Blow To Startups Trading In Foreign Shares

The SEC’s latest strike, as compared to applicable Nigerian rules, is unsurprising, but it is fraught with suspense.

It is illegal for anybody to operate in the Nigerian stock market as an analyst or specialist or in any other capacity or carry out investments and securities business unless they are licenced with the Securities and Exchange Commission, according to Section 38 of Nigeria’s Investments and Securities Act, the country’s main legislation on securities and investments.

But despite the provisions of the above regulation, the Nigerian Stock Exchange (NSE), which is governed by the Securities and Exchange Commission (SEC), issued draft rules on broker-fintech partnerships in July 2020.

According to the rules, any brokerage firm registered with the NSE who wishes to collaborate with a fintech business to offer products and services via an online portal must formally obtain approval prior to executing the arrangement.

The rules were possibly inspired by the absence of a clear regulatory framework governing such collaborations between fintechs and brokerage firms.

However, notwithstanding the NSE’s rules, the SEC ambushed Chaka Techologies from facilitating dealing on shares of international companies such as Google, Amazon, and Alibaba, with a restraining court order.

“The Commission is concerned that without proper regulation, the genuine aspirations of market innovators and investors could be subverted through the activities of unscrupulous actors who would try to exploit the growing popularity of Fintech investment options, to the detriment of the investing public,” SEC noted in a statement that followed.

One way of providing clarity on the differences between the proposed rules introduced by the Nigerian Stock Exchange and the Securities and Exchange Commission’s action against Chaka Technologies is that while both the NSE and the SEC’s actions contemplate the possibility of a fintech-broker partnership for purposes of trading only on stocks listed in Nigeria, NSE’s rules only concern themselves with trading on stocks listed on the exchange.

Again, all of the SEC’s moves have expressly been to disallow the trading of unregistered foreign stocks within the territories of Nigeria no matter what platform was used for the trading operations.

“The objective of the proceedings,” SEC said in its statement on Chaka’s ordeal, “is to ensure that all investment activities and market players are duly regulated by the Commission, in line with the requirements of the law.”

Nigeria stock trading regulates — *Source: Disclosures from Bamboo, Chaka, Risevest, Trove, NSE*

But problems begin to arise when the combined provisions of Sections 67–70 of the Investments and Securities Act and Rules 414 & 415 of the SEC Rules and Regulations, cited by SEC as grounds for disallowing trading in foreign stocks, are considered.

For its part, Sections 67–70 of the Investments and Securities Act prohibit anyone from inviting members of the public to buy or sell shares of a company unless it is a public company that has obtained the SEC’s approval prior to making any such invitations. This is reinforced by Section 54 of the same Investments and Securities Act, which requires the registration of all securities issued by a public company as well as all securities or investments issued by a collective investment scheme with the commission.

The provisions of Rules 414 and 415 of the SEC Rules and Regulations, on the other hand, have the direct effect of requiring any international issuer of securities in Nigeria to apply for registration of its securities with the SEC. But the commission may exempt a foreign issuer from registration on grounds of public interest and agreement between Nigeria and the issuer’s country; or if the issuer’s country is a member of the International Organization of Securities Commissions (I.O.S.C.O.). But it must equally be noted that the such exemptions will not prevent the foreign issuer from reporting to the SEC from time to time.

What is, however, unclear from the above laws is whether the SEC has the authority to regulate voluntary subscriptions by Nigerians of publicly traded shares on foreign stock exchanges through online platforms located outside the country; or even within the country, if the platforms’ target markets include individuals residing in foreign countries other than Nigeria.

Currently, users who sign up to buy and sell stocks on Chaka, Bamboo, and Trove (some of the country’s most common stock trading platforms) deposit their funds directly with SEC-licensed dealing members. Source: Disclosures from Bamboo, Chaka, Risevest, Trove.

At best, what the SEC’s latest statement would achieve is to discourage any local collaborations between fintechs and brokers which have the ability of lending some form of legitimacy to the operations of the fintechs as regards trading in international stocks.

And without this legitimacy, the credibility of the stock-trading platforms will be severely harmed.

Charles Rapulu Udoh

Charles Rapulu Udoh is a Lagos-based lawyer who has advised startups across Africa on issues such as startup funding (Venture Capital, Debt financing, private equity, angel investing etc), taxation, strategies, etc. He also has special focus on the protection of business or brands’ intellectual property rights ( such as trademark, patent or design) across Africa and other foreign jurisdictions.
He is well versed on issues of ESG (sustainability), media and entertainment law, corporate finance and governance.
He is also an award-winning writer

Nigeria stock trading regulates Nigeria stock trading regulates Nigeria stock trading regulates

Massive Leak Throws Up Data Of 85 Million Facebook Users In Egypt, Tunisia and Cameroon

April 7, 2021

Alon Gal, technical director of cybercrime intelligence firm Hudson Rock

A database of 533 million Facebook users, including 44 million in Egypt, 39 million in Tunisia and 1,997,658 in Cameroon, has been circulating on the Internet since April 3. According to Alon Gal, technical director of cybercrime intelligence firm Hudson Rock, which revealed the leak, 106 countries are affected by the hack. All 533,000,000 Facebook data records were just leaked for free.

This means that if you have a Facebook account, it is extremely likely the phone number used for the account was leaked.

All 533,000,000 Facebook records were just leaked for free.

This means that if you have a Facebook account, it is extremely likely the phone number used for the account was leaked.

I have yet to see Facebook acknowledging this absolute negligence of your data. https://t.co/ysGCPZm5U3 pic.twitter.com/nM0Fu4GDY8
— Alon Gal (Under the Breach) (@UnderTheBreach) April 3, 2021

Data in circulation includes full name, phone number, Facebook ID, last location, birthday, email address, account creation date, biography, relationship status .

This information, put together in a database, is the equivalent of a huge directory. Currently freely available on the Net, they can be used by hackers. They can be used to carry out targeted attacks such as phishing, SMS or email. The Internet users concerned must therefore redouble their vigilance.

But how do you know if you are concerned?

Troy Hunt, the creator of the HaveIBeenPwned.com site, recovered the entire database. It is therefore possible from this site to know if his email or phone number is there. To search, enter the phone number in international format, that is, with the area code.

If this leak is not the first in the history of the social network, t is however the largest with 419 million people hacked in September 2019 and 267 million in December of the same year.

The countries most affected by this piracy are Egypt (44 million users), Tunisia (39 million) and Italy (35 million).

Charles Rapulu Udoh

Charles Rapulu Udoh is a Lagos-based lawyer who has advised startups across Africa on issues such as startup funding (Venture Capital, Debt financing, private equity, angel investing etc), taxation, strategies, etc. He also has special focus on the protection of business or brands’ intellectual property rights ( such as trademark, patent or design) across Africa and other foreign jurisdictions.
He is well versed on issues of ESG (sustainability), media and entertainment law, corporate finance and governance.
He is also an award-winning writer

Facebook data Egypt Tunisia Cameroon Facebook data Egypt Tunisia Cameroon